It used to be so simple: You used your bank for checking and
savings accounts and loans, and you bought insurance from an
insurance agent or company. But things are changing. If it
doesn't already, chances are your bank will soon be selling
insurance. And what's more, your insurer may be offering
banking products.

As the lines that once divided financial services providers blur
and even disappear, the concept of one-stop shopping may sound
extremely appealing. But don't let convenience replace sound
decision-making.

When it comes to banks selling insurance, one important thing to
keep in mind is that your decision to buy or not buy coverage from
your bank can't affect your credit standing with the bank, says
Jeffrey A. Myers, assistant vice president of public affairs for
the Independent Insurance Agents of America. Federal statutes
prohibit tie-in arrangements between banking and nonbanking
products, and many states also have similar regulations.

"When you go into a bank and are solicited for nonbanking
products such as insurance, you can say no without any
repercussions," Myers says. "You aren't required to
buy an insurance product from a bank just because you have a loan
or a line of credit pending. You have the option to walk away and
know that it's not going to endanger your relationship with the
bank."

Of course, that's not to say that buying insurance from your
bank is always a bad idea. Myers advises evaluating the coverage
and costs, and doing some comparison-shopping just as you would
with any insurance product.

Some points to keep in mind about banks as sources of insurance:
They're not insurers; they have a relationship with an
insurance company and are essentially acting as brokers. In
addition, a bank typically has a relationship with only one
insurance provider and may therefore have limited offerings.
Finally, remember that insurance and other nonbanking products
aren't protected by the Federal Deposit Insurance Corp. (FDIC),
even though they may be sold through an FDIC-insured institution.
Only depository accounts are covered by the FDIC.

If you think the financial services marketplace is confusing
now, it's likely to become even more so in the future. At press
time, financial modernization legislation was working its way
through Congress; Myers says the bill would "allow banks,
insurance agencies, insurance companies and securities companies to
get into each other's business." That would mean more
competition, more choices--and more work for entrepreneurs to make
the best decisions.